Cocoa and wider ingredients price rises continue to impact global confectionery markets
Cocoa farming in Ghana. Pic: Shutterstock
This week has very much placed cocoa in the spotlight with two key trade shows in the Netherlands forming the Amsterdam Cocoa Week, showcasing every aspect of the industry.
One of the hottest topics of the moment within the sector remains the issue of cocoa prices – they’ve seemingly gone up at an alarming rate within the past year, and as one leading manufacturer relayed in its annual results, that the cost of cocoa had in fact doubled in the space of twelve months – which places a particular strain upon the whole industry.
Then there’s the not so insignificant matter of how cocoa is traded on the US and UK stock exchanges. This has invariably been reported around the world as being at a huge 46 year high. But as some observers have noted, including the International Cocoa Organisation, the historic comparisons between today’s values, set against what was achieved in the early 1970s, are figures that are seemingly being reported on a nominal basis, without accounting for inflation. This brings into question whether we are in fact experiencing once in a generation high prices relative to their historic post-war highs.
This cuts right to the heart of the confectionery industry as a whole, particularly anyone engaged in the chocolate sector – if you speak to anyone in the chocolate trade right now, they will tell you that the industry is really being hit by some huge price rises across ingredients, including cocoa. So the actual perception of prices being high is very real for many operating in the industry.
What are the key factors at the heart of this? Well, as we have previously reported, there are several major factors, including adverse weather conditions during harvests over the past couple of years affecting crop yields, the rising costs of critical inputs such as agricultural fertilisers being prohibitive expensive for farmers, and supply deficits in the past couple of seasons that have all converged to place extreme pressure on the system.
As Confectionery Production reported just a few short years ago, the situation was in fact the reverse, with many expressing concern at the apparent low price of cocoa, which caused particular alarm for those at the sharp end of the business working in agricultural communities in West Africa, where two thirds of supplies still come from.
While it is fair to say there have been pay increases this past year for farmers working in both Ghana and Ivory Coast, from speaking to a number of people across the industry, it seems we still have a very long way to go before these very same farmers are earning anything like a living wage. Until they do, the viability of the sector in the long-term really does hang in the balance.
Neill Barston, editor, Confectionery Production
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